FAC 61 Martin Hannett Lawsuit; covering page

FAC 61 Martin Hannett Lawsuit; detail [1]

FAC 61 Martin Hannett Lawsuit; detail [2]

The legendary Martin Hannett lawsuit through which he sought to have Factory Communications Limited wound up.

Transcript of the covering page

IN THE HIGH COURT OF JUSTICE
CHANCERY DIVISION
COMPANIES COURT

No. 001356 of 1982

IN THE MATTER OF FACTORY (COMMUNICATIONS) LIMITED AND IN THE MATTER OF THE COMPANIES ACTS 1948 TO 1980

THIS IS THE EXHIBIT MARKED "A" REFERRED TO IN THE AFFADAVIT OF JAMES MARTIN HANNET

SWORN BEFORE ME: [signed]
DATED THIS 23RD DAY OF MARCH 1982
A Commissioner for Oaths / Solicitor

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FAC 61
FCL vs. Hannett
March 16, 1982
OVERVIEW:

A lawsuit brought by Martin Hannett (thus, actually "Hannett vs. FCL" [See Note 1]) requesting that (1) FCL be "wound up" (dissolved), with all profits and capital distributed proportionately to each of the Factory directors (including Hannett), or alternatively (2) that Hannett's shares in the company be bought out by FCL and/or the directors for a "just and reasonable" price; that price being adjusted against "acts and omissions" of those same directors. The case was settled out of court in January 1984 with a £40,000 payment to Hannett. (FAC 229 states that Hannett "stepped down" as a director in 1984.)

Details

1. Respondents

Factory (Communications) Limited respondents as named in the lawsuit: Alan Frederick Erasmus, Robert Leo Gretton, Anthony Howard Wilson. (Peter Saville was specifically not named in the suit. See additional info below.)

2. Hannett's Claims (redacted from the filed lawsuit)

That Alan Erasmus, Anthony Wilson, Robert Gretton, Peter Saville and Martin Hannett were equal partners (each owning 20% of FCL) participating equally in the business and management of FCL.

That most of Peter Saville's shares in Factory were bought out by the Directors without Hannett's knowledge or participation (early in 1981, Erasmus, Gretton and Wilson agreed to purchase 14% of Saville's shares for £22,000), and that not only was this purchase wrongfully paid out as "Directors Fees", but that the resulting division of shares (23.5% to Erasmus, Gretton, Wilson & Hannett, 6% to Saville) had now been recorded as the FIRST shareholding.

That Hannett was not notified of, or had participation in, FCL Directors meetings.

That FCL had been, and continued to be, "seriously mismanaged". The following are Hannett's list of "mismanagement indications", all "without his consent or knowledge":

B. Rob Gretton was an undisclosed "sixth member" of Joy Division/New Order [See Note 3] and as band manager negotiated "extremely favourable" agreements with FCL/Wilson for New Order (including non-ownership of copyright) and A Certain Ratio, and that these groups were given prominence and priority over other Factory groups.

C. £10,000 was advanced to a record company known as "M.V.S." with no agreement or receipt.

That Hannett had not been permitted to produce records for FCL since August 1981.

That on October 1981, a Directors meeting resolution changed the nature of the company into a "night club venture"(FAC 51) without Hannett's knowledge or consent ("to which he never would have assented"), at an initial cost of £50,000. [See Note 4]

That "mutual trust and confidence" no longer existed between Hannett and the FCL Directors, and that the affairs of the company were being conducted in an "unfairly prejudicial" toward Hannett.

That there would substantial assets for distribution (among the Directors) upon the dissolution of FCL.

[1.] 50% of shares in FAC 51 Limited distributed to FCL, 50% to Joy Division. (Noting that Rob Gretton will receive TWO sets of shares, as he is a Director of FCL, and a "partnership member" of Joy Division.)

[2.] FCL and Joy Division to fund FAC 51 in equal amounts. [2 (i).] FAC 51 to be purchased by FCL & Joy Division and leased back to FAC 51 Limited. [2 (ii).] Proportionments to be adjusted between FCL & Joy Division based on their respective tax positions.

Commentary / Analysis

Unlike the generally accepted knowledge ascribed to this lawsuit, Joy Division and New Order royalties, as such, are not cited in the initial filing of Hannett's lawsuit (although they may indeed have figured as one impetus out of many), but rather it does, rightly, question Rob Gretton's role in Joy Division / New Order as relating to the detriment of FCL. Anthony Wilson has cited Factory's refusal to purchase a Fairlight synthesizer for Hannett [for £30,000], and to instead earmark £50,000 toward The Hacienda (FAC 51) as Hannett's main reason for taking legal action against FCL. (This is born out in part by one of the claims within the lawsuit itself.)

It's interesting to imagine what "might have been" had Factory bought the Fairlight for Hannett (spending £10,000 less than they eventually did). Would Hannett have achieved even further groundbreaking production techniques (including one later ascribed to Trevor Horn, who DID buy that Fairlight)? Would Hannett's continued presence at Factory have had an affect (for better or worse) on the roster of additional bands eventually signed to the label? The "what-might-have-beens" are especially painful in hindsight, though tantalising glimpses were had by his later Happy Mondays work. Hannett never fully "recovered" following the split, and who knows, perhaps his downward spiral and future decline were unstoppable in any event. (Hannett was certainly right about one thing: The Hacienda DID play a major role in dragging Factory down in the end).

Note 3: It's not a mathematical error, Gretton could indeed be counted as the "sixth" member of JD/NO. (Curtis, Sumner, Hook, Morris, Gilbert, Gretton)

Note 4: The Hacienda was finally built at a budget of somewhere between £200,000 and £350,000. By the time of the first anniversary celebration in May of 1983, it was rumoured to be £1,000,000 in debt.

Additional Info

FCL was incorporated as a private limited company on October 24, 1980, trading under "Kanehand". The trading name was amended to "Factory Communications Limited" on November 27, 1980. There may be stationery for this Factory number.